The bag lady Park of Avenue.

The triple-level, double penthouse on Park Avenue in Manhattan has been on the market for two years, with a price tag of $5.5 million. "Have you come for the open house?" the butler asks when I arrive, and looks disappointed when I shake my head. The apartment in question belongs to Judith Leiber, the designer whose handbags have graced the arms of nearly every First Lady on inauguration day from Mamie Eisenhower to Laura Bush. Her name may not be as recognizable as Louis Vuitton and Giorgio Armani, but her bags have been staples of fashion and pop culture for decades. Her distinctive creations are a regular presence at A-List red carpet events, appear in movies and television shows such as The Devil Wears Prada and Gossip Girl, and have even earned their own plot line in an episode of Sex and the City. "Judith Leiber is not a status symbol and Judith Leiber is not a luxury item," says Ellen Goldstein, professor of accessory design at the Fashion Institute of Technology in New York City. "Judith Leiber is an icon."

The butler ushers me into an Old World living room brightened by sunlight pouring in from a 30-foot floor-to-ceiling cathedral window. Sophisticated but not showy, the furniture is dark-wood European, set off by an eclectic mix of vivid oil paintings, blue and white Asian ceramics and Hindu and Buddhist sculptures. Leiber rises from the sofa to greet me. Even at 90 years old, her skin is flawless. Her short white hair is streaked with gray; she wears no make-up, just a few modest rings on her left hand and a monochromatic outfit--a black turtleneck sweater, black pants and black flats.

A Hungarian-born woman who spent World War II hiding in a Budapest basement, she possesses a European formality. I join her on the couch and as we talk, she makes little eye contact and her words betray little of her inner life. For a designer known for her glittering and whimsical creations, her simplicity and reserve are striking. Throughout our conversation--as though we were not seated in the safety of her New York apartment but still in war-torn Europe--she returns repeatedly to one short sentence: "We are lucky to be alive."

JUDITH LEIBER WAS BORN JUDITH PETO IN 1921 to an upper-middle class Jewish family in Budapest at the end of what is sometimes called the "golden era" of Hungarian Jewry. From 1867 to 1918, Jews, particularly those living in Budapest, flourished as businessmen, bankers, lawyers and traders and enjoyed the state's official recognition of Judaism as a religion. "No other country in Europe had been as hospitable to Jewish immigration and assimilation, and no other country had won more enthusiastic support from its Jews than the Hungarian kingdom," writes Columbia University historian Istvan Deak in his 2000 book, The Politics of Retribution in Europe: World War II and Its Aftermath.

Her father, Emil Peto, was a commodities broker who spoke five languages--Hungarian, Italian, French, German and English--and traveled frequently throughout Europe, while her mother, Helene, was a homemaker. "Her family story could be told time and time again," says Tim Cole, a historian at the University of Bristol in England. "There is some anti-Semitism, but there's a lot of assimilation on the part of Hungarian Jews, who saw themselves as really patriotic Hungarians."

The political and social landscape began to shift in 1920 when the Hungarian government adopted the first anti-Jewish policy in Europe--a numerus clausus [closed number] act that restricted Jewish enrollment at institutions of higher education. Historians attribute the change to growing nationalism inside the country after the dramatic redefinition and reduction of Hungary's borders in the wake of its World War I defeat, and the rising tide of fascism. "Jewish people were always separate," Leiber says of pre-World War II Budapest. "We didn't have too many non-Jewish friends--mostly it would be your own group of people."

For Judith, a gifted student, who, like her father, spoke five languages, the law meant she could not attend university in Hungary. Instead, her parents made arrangements for her to go to King's College in London, where they thought she would be safe if war broke out again. They urged her to study chemistry as a foundation for a career in the cosmetics business, and she agreed. "I could have been Estee Lauder," she remarks. In 1938, at the age of 17, Judith set out for London, where she took classes to prepare for the King's College entrance exam. She enjoyed London--where she tried Chinese food for the first time, watched American movies and frequented nightclubs--and spent nearly a year there before returning home in 1939 for the summer.

But before she could head back to London for the fall semester, Germany invaded Poland, and war broke out Her parents wanted her to return to London--even though the route would have been circuitous and dangerous--but Judith stayed in Budapest, not wanting to separate from them and her older sister, Eva. With a new anti-Jewish law restricting the number of Jews in certain professions, the Peto girls turned to trades--Eva trained to become a pastry chef and Judith turned to handbags, at the recommendation of her parents. "Hitler put me in the handbag business," Leiber told writer Enid Nemy for her 1995 book, The Artful Handbag.

Handbags were a fairly new addition to woman's fashion. Due to the Industrial Revolution and the increased popularity of railway travel, women had greater mobility outside the home and needed larger, sturdier bags to hold their belongings. The word handbag emerged to describe the new form of handheld luggage, which fashion historian Caroline Cox writes in her 2007 book, The Handbag: An Illustrated History, was "indispensable," since "women's clothes are very rarely designed with functional pockets."

Judith became the first female apprentice in Hungary at Pessl, then the most prestigious handbag company in Budapest. She began by sweeping floors and cooking up pots of glue, working her way up from apprentice, to journeyman, and finally, master. "I learned it from the bottom up," Leiber says. "I learned every phase of how to make a handbag."

Despite the anti-Jewish measures, the young woman flourished, becoming an expert in making...